CBRE Forecasts Canadian Commercial Real Estate Investment Will Exceed $40bn in 2017, Smashing Previous Record

With $33.1 billion of transactions recorded as of Q3 2017, Canadian commercial real estate poised to set back-to-back investment records

Toronto – December 20, 2017 – Investment into Canadian commercial real estate (‘CRE’) has once again reached new heights with $33.1 billion of transactions recorded as of Q3 2017. Looking at current levels of demand, CBRE Canada has forecast transaction volumes will top $40 billion by the year-end to set back-to-back record years for Canadian CRE investment. Record pricing has unlocked a new supply of marquee assets for sale that have been aggressively snapped up by a wide range of investors, both domestic and foreign. With Q4 2017 transactions still yet to be accounted for, investment activity in the first nine months of the year has almost matched the entire of 2016, in which Canadian CRE set a new record with $34.7 billion of transactions.

“The fact that we are on the cusp of setting back-to-back record years for Canadian commercial real estate is truly remarkable and speaks volumes about the level of interest in this market,” commented Peter Senst, President of CBRE Canada Capital Markets. “If you look at other mature real estate markets around the world, very few will break records in 2017, and even fewer will set back-to-back records. This record-setting activity is being driven by the fact that Canadian commercial real estate is at the intersection of two powerful investment trends. One, an increased global demand for Canada given the stability it provides in a time where geopolitical instability is becoming the norm and, two, a demand for hard assets to provide yield in a yield-starved world.

“What’s more, Canada has perhaps some of the best commercial real estate fundamentals in any mature market globally. Toronto, Vancouver and Montreal all feature in the top five of the lowest downtown office vacancy rates across all major North American cities. The average availability rates for industrial assets in Canada is at a record low and retail, despite the impact of e-commerce, continues to perform well. These solid market fundamentals are giving a greater number of investors confidence to not only to bid on Canadian commercial real estate assets, but bid aggressively, which has led to sharp increases in asset prices.” added Senst.

$11.1 billion of transactions were recorded during Q3 2017, which means investments have topped $10 billion in each of the quarters in 2017 so far. Toronto continues to be the largest destination for capital with $12.0 billion of transactions, up 22% year-over-year (‘y-o-y’). Vancouver is second at $9.5 billion, meaning it has already broken its previous investment record, $8.1 billion, set last year. Montreal is currently third with $3.5 billion in transactions, with Calgary and Edmonton rounding out the top five with $2.1 billion and $1.8 billion respectively.

Office saw the largest amount of investment, with $8.9 billion of transactions year to date as of Q3 2017. Despite a number of headline-grabbing failures by retailers in 2017, investors have not been dissuaded and continue to demonstrate a strong appetite for retail real estate with $7.0 billon of investment so far in 2017. As a result, retail investment has already surpassed 2016’s record-setting amount of $6.7 billion and is up 45% y-o-y. Industrial was third with $5.5 billion, up 32% y-o-y, and continues to be a perennial favorite with investors.

“What stands out is the fact that, despite all the negative headlines about bricks and mortar retail, investment volumes have set back-to-back all-time highs, and the year is not even finished. This increased activity contradicts the ‘e-commerce is killing retail’ narrative that we have long argued is oversimplified. There is undoubtedly an ongoing widening of the gap between the performance of toptier and B and C class retail assets, however demand for these best assets, and for urban in retail in particular, continues to strengthen,” commented Senst.

After a comparatively quiet 2016, Canada’s pension funds have been highly active in 2017 so far, accounting for $5.2 billion, or 26%, of all transactions above $10 million. This represents an 82% increase from the same point in 2016. Foreign demand for Canadian commercial real estate continues to be strong, with foreign investors accounting for 15% of all transactions above $10 million. While this activity has yet to hit the heights of 2016, where foreign investors made 27% of all transactions above $10 million, it’s still on track to become the second most active year for foreign investment into Canadian CRE.

“After focusing their growth abroad over recent years, Canada’s pension funds are on track to have their most active year in Canada since 2008. Eclipsed by foreign investors in 2016, Canadian pension funds have really flexed their muscles and considerable purchasing power this year to secure a number of marquee assets which have become available in 2017,” commented Senst.


About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through about 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

In Canada, CBRE Limited employs over 2,000 people in 22 locations from coast to coast. Please visit our website at www.cbre.ca.